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I get the error ORA-12560: TNS:protocol adapter error
on trying to execute server manager at the command prompt using the SVRMGRL command.

I set trace on in the sqlnet file and find that server manager tries to use BEQ as the protocol while it should be using TCP. All my files sqlnet.ora, listener.ora and tnsnames.ora refer to TCP as the protocol adapter. I am unable to find how server manager is picking BEQ. Please help.

well if you are doing connect internal in the machine where the database is located it will always use internal protocol IPC or BEQ
The error you are getting could be that the enviroment variable ORACLE_SID is not set, it doesnt necessary have to do with networking.

I set the Oracle SID at the system prompt. I also ran tnsping. It does not give the same error message.

But when I tried running sqlplus from Program files->Oracle816->Application Development->sqlplus, it returns a different error. It gives ORA-12500 TNS listener failed to start dedicated server process.

Just to be clear, at the command prompt I typed lsnrctl and did a start which was successful. My listener.ora, tnsnames.ora and sqlnet.ora files are correctly set.

But this is a development machine with just one small database instance created. I don't think it can be a memory problem. Oracle 8.1.6. is being installed here. Everything worked fine with Oracle 8.1.5